Shares of Merck & Co. Inc. MRK, +1.61% rose 1.1% to pace the Dow Jones Industrial Average’s DJIA, +1.14% premarket gainers, after Citi Research turned bullish on the drug maker, citing “materially revised forecasts” for cancer treatment MK-2870/SKB-264.
Baum raised his rating to buy, after being at neutral since November 2021, and lifted his stock price target by 23.8%, to $130 from $105. “Today’s report highlights positive recent evolution of MRK’s recent R&D and business development, in particular Merck’s recently licensed range of ADC [antibody-drug conjugates] from Kelun, most notably MK-2870/SKB-264 for breast, lung and multiple other solid tumors and our proprietary patient modelling for sotatercept in PAH [pulmonary arterial hypertension],” Baum wrote in a note to clients. He added that each 12-month delay to competitive biosimilars for cancer treatment Keytruda represents a 7% increase in net present value, which leads to “material upward risk” to his Keytruda estimates. The stock has tacked on 2.5% year to date through Wednesday, while the Health Care Select Sector SPDR exchange-traded fund XLV, +1.30% has slipped 1.4% and the Dow has edged up 1.5%.